Q&A: How Employers Can Navigate the NLRB's Stericycle Decision

Author: Luke Schulz, XpertHR Legal Researcher

September 21, 2023

On August 2, 2023, the National Labor Relations Board (NLRB) issued its decision in Stericycle Inc., marking a dramatic shift in the legal landscape for employers. In this article, David Phippen, employment and labor law expert and Senior Counsel at Constangy, Brooks, Smith and Prophete LLP, answers questions on what Stericycle Inc. means for employers and practical steps they can take under the new standard.

Q: What are your general impressions of the Stericycle decision? Was there anything particularly surprising?

A: I was surprised the Board simply didn't go back to the Lutheran Heritage standard. With this new standard, as with Lutheran Heritage, no evidence of real interference with an employee's Section 7 rights is required. However, unlike Lutheran Heritage, which stated that a rule was unlawful if an employee would reasonably interpret the rule or policy to interfere with their rights, Stericycle only requires that the rule or policy could reasonably be interpreted to interfere with employee rights to raise a presumption of interference. The Board has created vagueness around whether an employee could reasonably interpret a policy to interfere with their Section 7 rights. Could they not? Would they? That may be a slippery slope.

The Board also went and created a burden shifting framework. Once the presumption of interference is made, employers have the burden of justifying their rules and policies by showing that the policy advances a legitimate and substantial business interest. If the Board will, in fact, give careful and objective consideration to the employer's legitimate and substantial business interest(s) for having a rule or policy, that would be helpful, but that remains very much to be seen.

Q: Under the new standard, the Board has created a burden shifting framework. If the Board finds that a workplace rule or policy "has a reasonable tendency to interfere with employees' exercise of Section 7 rights," there is a presumption that the policy is unlawful.  At that point, the burden shifts to the employer to show that the policy advances a legitimate and substantial business interest. How can the employer meet this burden?

A: I think you would want to put on as much evidence as you could as to why the employer has the policy. And there might be a lot of reasons why an employer might have a policy. For example, a typical civility policy - an employer could say it's productive, it's efficient, everybody makes more money, and everybody goes home happier because they don't have uncivilized behavior between their coworkers.

The issue then becomes, however, that if your stated business interests are somehow stated incompletely, the Board may hold that against you. The Board frequently does that, appearing to split hairs to justify the result it wants and asserting that an employer gave inconsistent explanations. The Board may say, "Well, you only said the business interest you put forth was to make money. You didn't also say that it was to keep industrial peace among your workers so that they weren't pulling each other's hair at work or yelling at each other," when a necessary ingredient to making money and compensating employees well may be having employees being civil with each other.    

So, I think employers need to try to meet this burden with some creativity and try to be very broad in their purposes so that they don't limit themselves. However, they should also try to cover every detail of the business interests supported by the rule or policy.

Q: Assuming they meet the burden, the Board then requires the employer to show that the policy is narrowly tailored. How can employers ensure that their policies are sufficiently narrowly tailored?

A: A common way to narrowly tailor policies is to provide examples. Based on past history from the Board, employers can help narrowly tailor their policies by giving some examples to carve out things the rule or policy is not talking about, and also, to highlight the things the rule or policy is talking about. Will the examples be enough? That remains to be seen as specific rules and policies come up to the Board and the courts.

Q: There seems to be a lot of focus on the "legitimate and substantial business interests"; however, the Board found problems with several of the policies at issue in Stericycle. Specifically, that they were "vague and accompanied by a threat of discipline." Is there anything employers can do to prevent their policies from being vague?

A: There is balance of specificity and broadness that employers need to make judgment calls on when drafting and maintaining rules and policies. If too specific, the rule or policy potentially misses some conduct needed or meant to be covered. If they're too broad, employees may not understand that specific types of conduct are within the rule or policy's scope, which increases the risk that a neutral rule or policy touches on protected concerted activity, such that the Board could find that the rule or policy is presumptively interfering with Section 7 rights. Again, examples may help to avoid vagueness and give helpful specificity.

Q: Do you think a disclaimer for Section 7 activity would be enough to protect employers' policies? If so, would you recommend putting a disclaimer on individual policies or an overarching disclaimer for the entire handbook?

A: Employers often have an employee handbook or policy manual, and at the end of it there is a paragraph or provision that says something along the lines of, "Nothing in this handbook should be interpreted to interfere with your Section 7 rights." That hasn't typically won the day with the Board in the past, however; disclaimers have not been a panacea to avoiding problems.

Now, I think the answer is more disclaimers in more places to at least give them a chance. When I recently did a handbook, there were probably seven disclaimers in 40 pages - and maybe even one in bold at the front, too. Some decisions on where to put a disclaimer are easy. For example, employers typically don't need a disclaimer on an employee benefits policy. But employers may benefit from a disclaimer on a social media policy or on a conflict of interest policy.

Disclaimers may not be a one size fits all solution as well. For example, under the National Labor Relations Act (NLRA), everybody has a right to go on strike and walk out if they want and an employer could put a disclaimer in their attendance policy to this effect. But what employer in their right mind wants to suggest a dispute, out of thin air, in a rule or policy when there is no dispute, let alone mention or suggest strikes and walkouts?

At some point, the rule of reason kicks in and it may seem silly to put in so many disclaimers; to some employees it may be extra jargon. That is, if employees even read the rules or policies. But at least the disclaimer is there, which may be better than having nothing at all.

Q: It seems that the Board is suggesting that the actual structure of an employer's handbook can cause certain policies to violate Section 7 rights. More specifically, the Board found it was "not clear" that the Harassment Complaints Policy was limited to the sexual harassment context because the list of examples of types of harassment was "in another section of the handbook." Should employers consider a thorough review of not only specific language within their policies but also the structure of their handbook?

A: It's probably not a bad idea. The problem is that the standard, as stated, doesn't really take context into account. So, any provision, like Stericycle's Harassment Complaints policy, can be seen and read totally out of context. If the policies are structurally jammed together, you might be better able to argue the context as support for a lawful interpretation of a policy being the only reasonable interpretation of a policy.

If Stericycle had put their policies together, they may have been better able to argue their Harassment Complaints policy was limited to sexual harassment or discriminatory harassment and that that was the only reasonable interpretation.

Q: Are the risks greater for employers already in a union environment or should employers in a non-union environment also conduct a thorough review?

A: Employers in the union environment are probably not as bothered by the Stericycle decision. They are used to dealing in the heavily regulated environment of having the union there, having negotiations and having a collective bargaining agreement. And at many times during those negotiations, that relationship is balanced out, and rules and policies are discussed and agreed upon. Unions typically aren't intent on attacking civility and other conduct rules that they probably have little incentive to attack.  

So, it's probably more in the non-union context that the risks are higher. Employers who are completely unaware or generally unaware of the NLRA and its requirements can face surprises. This can be especially true if there is some type of employee dispute that arises that's completely unrelated to any union issue, but it involves protected concerted activity under Section 7 of the NLRA. For example, if employees are unhappy with something in their workplace and they stage a group walkout. It can look very much like insubordination or quitting. The employer may take action not realizing that it is protected concerted activity.

Q: What do you think the first step an employer should take under the new rules announced in Stericycle? What should employers keep in mind as they review their handbook under the new standard?

A: I think that employers should imagine almost anything they can think of that employees lawfully could do by any means - any dispute or protest conduct - to push for any demands or to raise or publicize any issues to co-workers, the employer, customers, vendors, the public or a governmental agency - any audience. Then the employers should carefully re-read their rules and policies to see if any conceivable interpretation of the words could interfere with any of the conduct that they just thought of.

It's important to keep in mind that Section 7 protects not only an employee's right to protest, but also their right to prepare to protest. So, it's doubly important to read every sentence and be as creative as possible to try to 'outthink' what words could even possibly be reasonably construed by the Board at any level to interfere with an employee's Section 7 rights.

And there will be some things an employer maybe can't get around and yet needs reasonable, commonsense rules and policies to operate efficiently. There may be necessary impact on certain rights and employers just have to go with it. For example, attendance requirements for working and keeping a job.  That is when having strong business justifications for your policies and the ability to articulate them persuasively will provide potential backup if the employer ever has to defend the rules or policies. Will they ultimately prevail before the Board or the courts? That remains to be seen.

Q: Any final thoughts?

A: Unfortunately, the bottom line here is that employees are the ones who may be hurt by the Stericycle standard because their workplaces may be less favorable, less civil, less productive, and less happy as employers are restrained from maintaining neutral workplace rules and policies that help keep workplaces civil and productive. There may be broader protection of Section 7 rights, but workplaces day-to-day may not be as good for employees because certain rules and policies that are generally implemented to ensure workplace happiness, civility, and productivity are now under renewed, if not increased, scrutiny.